2017 (6) TMI 122 - AT - Income Tax

Reopening of assessment - sale of land falling within 8Kms of distance from the area limit of Municipal Corporation of Coimbatore thus income in the form of LTCG accrued during the year has escaped assessment - Held that - It may be true that in returns filed assessee s had not have made a specific claim that agricultural land sold was beyond 8 km from Corporation limit. However, the returns were filed after the above referred reply which was available with ld. Assessing Officer. In the said reply assessee had mentioned that the agricultural land was situated more than 8 Kms from the corporation limit. Further, assessee s had pressed such a claim before ld. Commissioner of Income Tax (Appeals). Ld. Assessing Officer was aware of the claim of the assessee that land sold was agricultural in nature. It cannot be considered it as an altogether new claim made by the assessee. Assessee in pursuant to notice u/s.148 of the Act had made a specific claim that agricultural land sold were beyond 8km limit of Coimbatore Corporation limits. In the circumstances, whether surplus arising out of sale of agricultural land would be exigible to capital gains tax, in my opinion, requires to be adjudicated by the ld. Commissioner of Income Tax (Appeals). Therefore, set aside the orders of the ld. Commissioner of Income Tax (Appeals) and remit all the appeals back to his file for consideration afresh in accordance with law. Appeals of the assessee partly allowed for statistical purposes.

Summary

Issues: Assessee's appeal against orders of ld. Commissioner of Income Tax (Appeals) for the impugned assessment year. Interpretation of provisions regarding capital gains tax exemption for sale of agricultural land beyond 8 km from Corporation limit.

Analysis:
1. The ld. Counsel for the assessee argued that all joint owners, except one, sold agricultural land beyond 8 km from Corporation limit, claiming exemption from capital gains tax. Despite initial oversight in returns, the claim was raised during assessment proceedings and before ld. CIT(A). Disagreement arose on the CIT(A)'s rejection citing lack of power under section 251(1)(a) of the Act, referencing Goetze (India) Ltd vs. CIT judgment. The counsel contended that appellate authorities can consider statutory claims, citing National Thermal Power Co. Ltd vs. CIT judgment.

2. The ld. Departmental Representative countered that the assessee admitted the land was within 8 km in their returns, contradicting the later claim. The Assessing Officer's reasons for reopening the assessment highlighted the proximity of the sold land to the Corporation limit, leading to the belief of escaped income. The assessee's subsequent clarification about the land being beyond 8 km was deemed admissible, as it was mentioned in a reply available to the Assessing Officer. The ITAT concluded that the claim regarding the agricultural nature and distance of the land from the Corporation limit should be considered by the CIT(A) and remitted the appeals for fresh consideration.

3. The ITAT's decision partly allowed the assessee's appeals for statistical purposes, emphasizing the need for the CIT(A) to reevaluate the claim of the land sold being exempt from capital gains tax based on its agricultural nature and distance from the Corporation limit. The judgment was pronounced on April 26, 2017, in Chennai.